He said there would be full adoption of the International Financial Reporting Standards (IFRS) by banks in same period, adding that both principles would enhance transparency and additional disclosures in banks’ financial reporting.

Consultant to the CBN on Basel II and IFRS Implementation Project, Gianfranco Antonio Vento,said there was need for banks to assess their capital adequacy positions relative to their overall risks. He called for regulators to review and take appropriate actions in response to those assessments.

Vento explained that the Basel standard was meant to ensure that a bank maintains an adequate level of unencumbered, high-quality liquid assets that can be converted into cash to meet its liquidity needs for a 30 calendar day under a significantly severe liquidity stress scenario specified by supervisors.

At a minimum, the stock of liquid assets should enable the bank to survive until Day 30 of the stress scenario, by which time it is assumed that appropriate corrective actions can be taken by management and/or supervisors, and/or the bank can be resolved in an orderly way.

He said local banks are already meeting with the CBN staff involved in regulation and supervision of the Basel project while administration of a questionnaire to the lenders is ongoing. It was also leant that individual meetings with the banks and collection of all the additional information necessary for the implementation was also on course.

Vento said the result has been the Baseline Survey to highlight the state-of-the-art in the implementation process of Basel II and III in the banking sector, to enhance the implementation as well as the following stages for an effective introduction of the new regulatory framework.

Banks are also involved in the preparation of a Quantitative Impact Study (QIS) and a comprehensive and detailed regulatory framework meant to clarify and adapt the Basel II and III principles to the local context.

“Preparation and review of gap analyses that banks will perform in order to point out their distances from the minimum regulatory standards to be implemented as well as progressive implementation of Basel II and III rules, with a parallel running period in which the existing rules will cohabit with the new framework,” he said.

He said banks, which have developed internal models and are able to meet the minimum standards fixed in the new Basel II and III regulatory framework, will be allowed to apply for the validation of their models.

Vento explained that there was need to encourage market discipline by developing a set of disclosure requirements that allow market participants to assess key information about a bank’s risk profile and level of capitalisation.